With all the recent corporate finance scandals and the regulations that were subsequently put into place, most IT professionals have turned their attention toward back-office systems and the data they hold.
But you shouldn't forget about your customer relationship management (CRM) systems when making efforts to comply with regulations such as those contained in the Sarbanes-Oxley Act, according to Chris Eldredge, SAP's director of analytics.
"A lot of the focus has been on financial and audit perspectives," Eldredge said. "If you look at the legislation in detail, it's written around processes, and controls of processes."
When examining the fine print of the federal legislation, company executives will find that some of their sales and marketing documents must be audited by a third party. They will also discover that they are required to report material changes in their financial situations in real time.
Sarbanes-Oxley requires company CEOs and CFOs to sign off on the results of financial reports, and those reports are "going to have a heavy reliance on income statements which come out of the sales process," Eldredge said.
Enterprise software vendors have not really focused much marketing on Sarbanes-Oxley, but that doesn't mean there's not a market out there, according to Bob Blumstein, an analyst with International Data Corp. in Framingham, Mass.
"It's an issue that there should be a greater awareness of," Blumstein said. Unfortunately,
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he added, marketing departments are often ignored at the start of the compliance process. Then, a question whose answer requires "extensive financial reporting comes up and it needs to be tracked back, and people find they have a loose marketing system," he said.
Recent emphasis from enterprise software vendors on a single view of data and central data repositories should benefit customers who are now struggling with how to deal with compliance, Blumstein said. Among the vendors well-positioned to handle these issues are SAP, Siebel Systems Inc. and, to some extent, PeopleSoft Inc., he said.
The key in using CRM to comply with Sarbanes-Oxley is integration with back-office applications, according to Eldredge, but there are some key areas of concern that factor into CRM.
For example, quantifying sales revenue can be a difficult timing issue. At what point in the process, Eldredge asked, do you recognize the revenue? Similarly, he added, how do you account for a complex business partnership that spans several years, products and special pricing?
"These are things that can be accounted for in a software environment," Eldredge said.
One of the key things to look for in CRM software when considering Sarbanes-Oxley compliance is how well your system creates an audit trail back to the financial systems, Eldredge said.
"Do you have to build a heavily customized interface to get it back to financials, or do you have a well-defined document flow that allows [a] user or financial auditor to track it all the way to [the] source system?" Eldredge asked.
With SAP, there is a 1-to-1 correlation between the financial and marketing systems for accurate reports, Eldredge said.
SAP analytics also allow organizations to track changes in business activities in real time. For example, if a sales rep sells 500 units but mistakenly records 1 million, CRM systems can identify those instances and documents as they occur, rather than after the fact.
Connectivity is another factor, Eldredge said. For example, with SAP, managers have the ability to look at exceptional situations through alerts, so that they can track key performance indicators (KPIs) and make changes before the end of the quarter, Eldredge said.
For all the attention Sarbanes-Oxley is receiving, little notice has been given to the front-office side, but that is beginning to change, Eldredge said.
"Most companies," Eldredge said, "are just at the point of thinking about how they might leverage CRM processes and capabilities going forward."
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